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Author: | Gonzalez, J. (et al.) |
Title: | Can branded drugs benefit from generic entry? The role of detailing and price in switching to non-bioequivalent molecules |
Journal: | International Journal of Research in Marketing
2008 : DEC, VOL. 25:4, p. 247-260 |
Index terms: | pharmaceutical industry health service competition patents brands marketing market entry |
Freeterms: | generic entry heterogeneity |
Language: | eng |
Abstract: | Patent expiration represents a turning point both for the brand losing patent protection (hereafter as: pat-prt.) and also for the non-bioequivalent drugs. This paper examines how physician characteristics and prescribing decisions impact competition among molecules (here as: mol/s.) of a therapeutic class once generic versions of one of these mol/s. enter the market. It is shown that the traditional focus on the single mol/s. losing pat-prt. is not sufficient to understand the impact of generics in the category and their cost-saving potential. The generic entry under analyzed category is found to lead to the expected decrease in the prescription of the branded mol/s. bioequivalent (here as: bio-eq.) to the generics and also to unexpectedly benefit other non-bio-eq. branded drugs as physicians switched from the contested mol/s. to these other branded alternatives. However, a group of price-sensitive physicians increased their use of the new generics to the detriment of all branded alternatives, allowing for additional savings in health care costs. The overall market result is a minor decrease in the prescriptions of the now much cheaper mol/s. This paradox was identified previously in several pharmaceutical categories by Caves, Whinston and Hurwitz (1992) but without a systematic understanding and explanation. It is shown that the understanding of this kind of market paradoxes requires marketers and policy makers 1. to determine the size of physician segments sensitive to marketing activity and prices, and 2. to assess the marketing activity of all pharmaceutical firms, whether bio-eq. or not. |
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